Puducherry’s flawed DBT scheme exposes issues of accessibility, transparency, and nutritional security

Shift from in-kind food distribution to DBT leaves many struggling for essential provisions, imperiling food security and efficacy of welfare policies.

Members of All India Democratic Women’s Association staging a protest to press for their demands including reopening of ration shops in Puducherry on September 25, 2023. | Photo Credit: KUMAR SS

“Look there,” said Ravi, 56, an agricultural labourer, pointing to the other side of the road at Purana Singa Palayam, or P.S. Palayam, in Puducherry. “People who go to that ration shop get everything.”

P.S. Palayam village falls under both Tamil Nadu (Villupuram district) and Puducherry (Mannadipet Commune Panchayat). Ravi lives on the Puducherry side and he is waiting outside the P.S. Palayam Primary Agricultural Cooperative Credit Union with his red ration card, which is meant for those below the poverty line. Ravi said, “We only get money. And it is not enough to buy rice from the market.”

He was referring to the Direct Benefit Transfer (DBT) scheme under which money is transferred to the beneficiary’s account instead of rice being supplied at the ration shop. Across the road, in Tamil Nadu, the public distribution system (PDS) still works in the old way, supplying rice, oil, pulses, etc. to cardholders.

In August 2015, the Centre’s Department of Food and Public Distribution notified the Cash Transfer of Food Subsidy Rules, 2015, under the National Food Security Act (NFSA). In September 2015, Chandigarh and Puducherry along with urban areas of Dadra and Nagar Haveli were selected to implement a pilot scheme for DBT. At that time, the All India N.R. Congress (AINRC) was in power with N. Rangasamy as Chief Minister.

In 2016, the Congress government came to power with V. Narayanasamy as Chief Minister. Owing to challenges in implementing the DBT scheme, Narayanasamy used ration shops to distribute rice for 17 months, before going back to cash transfer. In 2018, he approached the then Union Food Minister Ram Vilas Paswan to dismantle DBT altogether and was given an in-priniciple approval that ration shops would be reopened.

However, citing complaints of pilferage and poor quality of rice that she had received, the then Puducherry Lieutenant Governor, Kiran Bedi, intervened in 2019 and insisted that the Civil Supplies Department continue with DBT. This sparked a dispute with the Narayanasamy government. The issue was escalated to the Ministry of Home Affairs, which ruled in favour of DBT.

Since then, all 515 ration shops in Puducherry have remained closed. The Union Territory has a population of 15 lakh.

As on March 9, 2024, there were 2,75,529 ration cards in Puducherry, including 1,45,546 Priority Household (PHH) cards and 14,914 Antyodaya Anna Yojana (AAY) (poorest of the poor) cards. When Karaikal, Mahe, and Yanam are also considered, there is a total of 3,62,539 ration cards.

Amudhavalli, a homemaker from Mannadipet Commune Panchayat in Puducherry. | Photo Credit: Siddarth Muralidharan

Since its implementation, the cash instead of supplies arrangement has run into several issues. Women of P.S. Palayam said that in most cases the money went into the bank account of the male family head, who invariably used it to buy alcohol. Amudhavalli, a homemaker with a red card, said she received the money every month but sometimes it did not arrive on time. “How can we rely on this to meet our food needs?” she asked.

All ration cardholders that Frontline spoke to said there was no fixed date each month when the money was credited into their accounts. In fact, many of them are not aware of when the amount is credited.

Ground reality of DBT

If one of the objectives of the DBT system is to “provide greater autonomy to beneficiaries to choose their consumption basket”, then the ground reality as it is playing out in Puducherry runs contrary to that. To withdraw the DBT money from the bank, daily wage workers sometimes have to wait for so long that they end up missing work and thus lose the day’s wages. Not all of them are familiar with ATM services either. Several incidents have been reported of banks recovering loans from customers through their MGNREGA salaries and a few said the DBT amount they got for rice had also gone directly towards the repayment of loans taken from self-help groups. Others reported instances of the DBT amount being deducted automatically as a fine for not maintaining the minimum balance.

A ration shop at Karikalampakkam in Nettapakkam Commune, Puducherry, that was shut down. | Photo Credit: By Special Arrangement

Under the PDS run by States and UTs, red cardholders (below poverty line) get Rs.600 a month in lieu of 20 kg rice, and yellow cardholders (above poverty line) get Rs.300 in lieu of 10 kg rice. In 2020, during the pandemic, under the Pradhan Mantri Garib Kalyan Anna Yojana, the Centre decided to distribute foodgrains to Priority Householders (PHH) cards and Antyodaya Anna Yojana (AAY) cards across the country as a means to alleviate the widespread hunger crisis that had emerged by then.

“In the UT where the DBT scheme is operational, the cardholders get a cash equivalent of rice at the rate of Rs. 41 per kg. PHH cards get the cash equivalent of 5 kg rice for each member of the family and AAY cards get for 35 kg,” said Prem Anand, secretary of Bharatiya Puducherry Fair Price Shop Employees Development and Welfare Union.

However, over the years the DBT amount has not been adjusted to match the increased price of foodgrains in the market. Today, 1 kg of rice costs Rs.43 at shops in P.S. Palayam, which has around 700 cardholding families, with a majority falling below the poverty line. Not only does the DBT amount fall short, but in cases where the family members are more, the DBT amount remains the same.

Similarly, with LPG cylinder prices hovering around the Rs.800 mark per unit (as of March 22), people in the rural parts of Puducherry like Vadhanur said that if they could buy kerosene from ration shops as before, they would be able to reduce consumption of the much more expensive LPG.

Venkatesh Athreya, a Chennai-based development economist, said there were ample studies to prove that providing grains in kind had a far better nutritional impact than delivering cash. He listed the various issues associated with DBT: “One, the benefit is fixed in nominal money terms while inflation is occurring constantly. So, the real value of the presumed benefit is getting eroded. Two, people have no control over the availability of supplies in the market. Even if they are given vouchers, the shops are not obliged to hold the commodities. Three, the entire point of PDS in India is also linked to procurement. If the government switches to cash, it becomes the first step to dismantling the procurement system as well.”

R. Rajangam, Puducherry unit secretary, CPI(M), said, “Puducherry is being used as a lab to experiment with DBT when even large States ruled by the BJP do not have this cash transfer system.”

In February this year, the CPI(M) started an indefinite protest near the Civil Supplies office at Kokku Park demanding the reopening of ration shops, but Chief Minister N. Rangasamy refused to give an assurance for the same. On March 27, 2023, the Chief Minister announced in the Legislative Assembly, amid much fanfare, that his government would distribute rice, wheat, sugar and even millets through ration shops. “But nothing has happened so far,” said Rajangam.

A Puducherry resident who took part in the protest told Frontline: “Last year, the Prime Minister announced that the Centre will provide foodgrains to about 80 crore persons in the country for five years. Why is Puducherry not covered under this guarantee? Why are we getting cash?”

A resident of Mahe (a part of Puducherry, surrounded by Kerala) expressed similar sentiments. He said that Palloor, which comes under Mahe and is located near Thalassery in Kerala, does not have ration shops whereas Thalassery residents get various commodities under the PDS. “This creates disparity and disappointment among people,” he said. The situation is the same in other territories of Puducherry like Yanam and Karaikal as well. Rajangam said people in Tamil Nadu and Kerala get 14 and 21 commodities, respectively, including tea and matchboxes, from ration shops.

Ahead of the 2021 Assembly election, the AINRC promised in its manifesto that it would reopen ration shops if it came to power. M. Vaithianathan, Congress MLA from Lawspet, asked why the AINRC, which protested against the DBT move when it was in the opposition between 2016 and 2021, had done nothing now. “The public sentiment against DBT will surely reflect in the upcoming Lok Sabha election,” he said.

Ramesh, who works with Civil Supplies Department has taken to a low-paying job now since hundreds of PDS shop workers like him have not received their salaries for the last 55 months. | Photo Credit: Siddarth Muralidharan

Workers at PDS shops

Ramesh, 56, is one of the hundreds of workers who are still on the rolls of the Civil Supplies Department but have not been paid wages for the past 55 months. With ration shops shut and no supplies to handle, he has taken to working as a daily wage labourer. As someone who worked as a salesman at a PDS shop in Puducherry for a large part of his life, Ramesh said that when the Central government announced it would supply foodgrains through the COVID-19 period, the workers, despite being unpaid, toiled to distribute supplies to the public. He claimed that they were given an assurance that ration shops would function after the pandemic, but that did not happen.

On February 29, ration shop workers under the Bharatiya Puducherry Fair Price Shop Employees Development and Welfare Union (affiliated to the Bharatiya Mazdoor Sangh) took out a march from Thattanchavady Industrial Estate to the Collector’s office. The union has around 550 members from among the nearly 700 PDS workers in Puducherry. Their demands included the reopening of ration shops, an end to the DBT system, and the payment of salary for 55 months. The workers announced that they would boycott the upcoming Lok Sabha election as their petitions have been continuously ignored. They left their ration cards and voter IDs on the Collector’s desk as a mark of protest before leaving.

The PDS shop workers left their voter IDs and ration cards at Collector’s office. | Photo Credit: By Special Arrangement

Prem Anand, secretary of the union, said that the district collector was making efforts to send the cards back to them through the anganwadis near their houses. “The workers’ families had refused to take them back, and the administration is now said to be planning to send them by registered post.”

‘No proof of food security’

Asked if the reduction in spending on food (as indicated by the recently released All-India Household Consumption Expenditure Survey 2022-23) makes the cash payment in place of rice relevant, Athreya said the mere reduction in the share of expenditure on food items is no proof that the poor have become food secure. “As the prices of non-food goods like transport, healthcare, education have risen very sharply under neoliberal policies, the poor are forced to reduce their food intake and spend more on non-food items.” He added that the rise in overall average non-food expenditure is not an indicator that this is a voluntary choice for the poor. Also, the data does not include individual numbers that tell whether the decline in spending on non-food goods has occurred among high expenditure groups or among low expenditure groups.

Growing public opposition

In December 2023, when the then Lieutenant Governor Tamilisai Soundararajan attended a Viksit Bharat Sankalp meeting in Bahour Commune Panchayat, women participants asked her about reopening ration shops in the Union Territory. Six months earlier, the Puducherry Minister for Civil Supplies, A.K. Sai J. Saravanan Kumar, had met Union Minister for Commerce, Food and Consumer Affairs, Piyush Goyal, in New Delhi and submitted a memorandum asking the Centre to allow distribution of foodgrains rather than cash, but there has been no progress. Despite repeated attempts by Frontline, the Puducherry Minister could not be reached.

It is ironic that the public distribution system has come to a halt in Puducherry, the place where the revolutionary Tamil poet Subramania Bharati wrote, “Thani oru manithanukku unavillai enil jagathinai azhithiduvom” (We will destroy the whole world if there is no food even for one man).